At a press conference today, Wednesday, April 26, Treasury Secretary Steven Mnuchin and National Economic Council Director Gary Cohn presented an outline of President Trump’s tax proposal framework. It is expected that there will be considerable “spin” – both favorable and unfavorable – with respect to various aspects of the proposal. This proposal is seen as an opening bid in tax reduction and reform efforts that will be negotiated between the White House and the House and Senate. What was presented today was the President’s tax reform objectives and highlights, and a copy of the proposal that was distributed at the press conference today can be found here.
- Reducing the top corporate income tax rate from 35% to 15%;
- Reducing the corporate rate to 15% rate is presented as a “business tax rate” and the Trump administration has indicated that this lower rate would also apply to pass-through business entities (if in line with President Trump’s proposal articulated in a Detroit campaign speech, the lower rate would only apply to earnings accumulated in the pass-through entity);
- Moving to a “territorial” international tax system, whereby profits earned by U.S. companies abroad would not be subject to U.S. income tax;
- Levying a one-time tax on the profits of U.S. companies that have been accumulated abroad and have not yet been subject to U.S. income tax;
- Reducing the number of individual rate brackets from seven to three (10%, 25%, and 35%);
- Doubling the standard deduction and providing additional tax relief for child care expenses;
- Eliminating certain tax breaks (potentially including the deduction for state and local taxes), while keeping the charitable and mortgage interest deduction;
- Eliminating the 3.8% “Obamacare” net investment income tax;
- Eliminating the alternative minimum tax; and
- Eliminating the “death tax” (it is not clear whether this would only affect the estate tax, or also gift and generation-skipping transfer taxes).
For additional information, please contact Leigh Griffith, John Bunge or any member of the Waller Tax practice at 800.487.6380.
The opinions expressed in this bulletin are intended for general guidance only. They are not intended as recommendations for specific situations. As always, readers should consult a qualified attorney for specific legal guidance.